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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: jeffbas who wrote (16222)	1/21/2003 10:17:08 AM
From: Bob Rudd	Read Replies (1) \| Respond to of 78594

Jeffrey: It just occurred to me after reading your post that one reason why margins are so high in many tech companies is the primary components of cost, the R&D and SG&A, come after the margin is calculated. It costs huge to design a chip or software package or develop and get approval on a new drug, but after it's designed/approved the cost of running off subsequent units is relatively modest. This is not an LLTC specific comment, just a general observation that a big chunck of this difference in margins between tech and non-tech companies would largely go away when comparing EBIT instead of gross margins.